That would be fine from NGF's perspective if NGF could get it cheaply.
However, CRK will not be sold cheaply because the management has a huge stake and will demand a high price. CRK are under no pressure because they still have about $8m in cash for exploration. They can pick their partners and have their future in their own hands. The size and grade of the CRK deposit would allow for a mid-size long-term operation.
I think CRK's Chairman who holds 25% of CRK will want to sell out as a miner or near miner and not just an explorer (unless the price is much higher). They have engaged an investment bank to advise on progressing their deposit. Perhaps a deal could be made on toll treating CRK ore at NGF, which I understand would also lower NGF's cost of milling. CRK's ore is of higher grade than NGF's open cut operations.
I hold a few CRK, so I have an interest in both camps (my NGF stake is much bigger).
I believe the funds NGF are raising will be used to progress its current gold projects and to provide a reserve for further opportunities. It will mean NGF will not appear to be so badly squeezed if the AUD gold price were to fall further or if they need to redeem the convertible notes. I am not keen on this capital raising because I accept that the squeeze is only short term and will gradually wane with the much higher production coupled and lower average cost. I would prefer for the overseas investors to bid up NGF's share price by buying on-market. However the shares may be placed at a premium to NGF's current share price.
loki
NGF Price at posting:
31.5¢ Sentiment: LT Buy Disclosure: Held
